All eyes on Nevada for online poker bill

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CARSON CITY, Nev. - Lawmakers were urged Tuesday to act quickly on Gov. Brian Sandoval's plan to let companies offering online poker in Nevada take bets from players in other states - a potential moneymaker that would help preserve the state's status as the nation's gambling capital.

State Gaming Control Board Chairman A.G. Burnett told the Senate Finance Committee that Nevada doesn't want to be late to the game and that other jurisdictions already are looking at the concept.

"This is an item being looked at around the world," he said. "Other state legislatures will be looking at this. Foreign governments will be looking at this."

Sandoval wants lawmakers to approve within 30 days legislation that would authorize such wagering through multi-state Internet gambling compacts.

"Nevada has always been the gold standard of both gaming regulation and operation and I intend to see to it that our state will lead the world in this new frontier," the Republican governor said in his recent State of the State address to lawmakers.

Burnett said one problem is the lack of decisive action by the federal government to uniformly authorize and regulate Internet gambling.

"The lack of federal clarity goes to the need to act," he told members of Finance.

"Other states are getting ready," he said after the hearing. "Some are asking us what we're going to do."

Burnett said his office has had inquiries from outside the country as well - including from gambling regulators in the United Kingdom - and Nevada should strive to become the "regulatory hub" for Internet gambling. If Nevada doesn't move quickly, "other states will fill that vacuum," he added.

Finance Chairman Debbie Smith, D-Sparks, said after the hearing that the committee wants to understand exactly why swift action is needed on the issue.

Online betting across state lines is essentially banned in most of the nation, but several states, including California and New Jersey, are weighing bills that would legalize some types of online gambling. The Nevada proposal, Assembly Bill 5, is intended to position Nevada-based companies to expand their customer base as other states ease restrictions. It's one of a handful of gambling bills lawmakers will be asked to consider - and by far the most important.

Nevada currently permits online poker but no other type of Internet gambling, so any compacts with other states to share virtual gamblers would apply only to poker.

The proposal builds on state regulations from 2011 that established a framework for Nevada companies to offer online poker. Subsequent legislation would be needed to allow the state to join the international global gambling community.

About 85 countries have legalized online gambling, and online players are believed to wager as much as $35 billion worldwide each year, according to estimates by American Gaming Association lobbyist Frank Fahrenkopf Jr.

The state bill follows failure to pass federal online gambling regulations in Congress.

Senate Majority Leader Harry Reid, D-Nev., and Sen. Jon Kyl, R-Ariz., made a push for sweeping legislation as the congressional session drew to a close in December, but ultimately ran out of time to unite the many factions with a stake in the issue. Reid, a former Nevada Gaming Commission chairman, has said he will renew his efforts this year.

Nevada's existing online gambling regulations state that companies can't accept wagers across state lines until Congress or the U.S. Department of Justice takes regulatory action. Assembly Bill 5 would get rid of that requirement. Burnett has said he did not anticipate any conflict with federal law.

Many states began looking into online poker after the U.S Department of Justice issued a letter in 2011 stating that the federal Wire Act of 1961, often used to crack down on Internet gambling, only applies to sports betting.

Gambling has long been an important revenue generator for Nevada, which does not impose a state income tax. State regulators have granted online gambling licenses to at least 17 casino and technology companies, and more are seeking licenses.

These companies may "play in the sandbox" of Nevada's 2.8 million residents and Las Vegas' 39 million annual visitors for a time, but the industry will eventually need to expand to continue to interest investors and players, said Dave Schwartz, director of the UNLV Center for Gaming Research.

Among the industry players eagerly watching Assembly Bill 5 is Tom Breitling, chairman of Ultimate Gaming, who plans to launch a real-money poker site that will accept wagers from laptops and smartphones within the state's borders this year.

"This is peer-to-peer game, so you want your customers when they go online to actually be able to get a game of poker going" he said.

"It becomes much more exciting if the player pool is 100,000, not 10,000, and if you can actually go online and win $1 million, not $10,000."

Lawmakers will consider several other bills introduced this session on behalf of the Gaming Control Board:

• Assembly Bill 7 would expand the Gaming Policy Committee to 11 members by adding a representative from academia. The bill would also allow the governor, who chairs the policy committee, to establish a subcommittee on education. The new subcommittee would consist of no more than five members, and would evaluate all gambling-related educational institutions, among other duties.

• Assembly Bill 10 would update state law on counterfeit chips and tools used to cheat. Among other technical revisions, the bill specifies that it is crime to possess counterfeit gambling chips and to manufacture tools intended, but not actually used, for cheating.

• Senate Bill 10 would allow the Gaming Control Board to charge casinos and other gambling companies for the costs of investigating overpayments. Currently, companies can ask for refunds of state taxes and fees they have overpaid. This bill would allow the state to bill companies for the costs of evaluating refund requests.